Half Year 2010 Unaudited Financial Results
26 August 2010
Financial outlook remains strong; Urenco USA/LES facility has commenced operations.
- Shift in customer deliveries impacts half year net income but financial and operational outlook remains strong
- Increased global enrichment presence with our US facility now operational
- Strong order book underpins further expansion
- Good progress in European enrichment capacity expansion projects
- Funding position strengthened Financial highlights
|Income from operating activities
|Capital expenditure (i)
|Net cash flow from operating activities
(i) Total Group capital expenditure includes non enrichment capital expenditure
Shift in customer deliveries impacts half year results but financial and operational outlook remains strong
Adjustments in the timing of Separative Work Unit (SWU) deliveries to the second half of this year resulted in lower revenues for the first six months of 2010 in comparison to the prior year. Effective cost control and foreign exchange gains led to a higher EBITDA in the period. However, net income reduced as a result of increased depreciation, following new capacity coming on-line, and higher finance costs due to increased debt and results on hedges not eligible for hedge accounting under IAS39. Customer deliveries in July have already resulted in higher turnover and net income levels compared to last year and it is anticipated that full year results will show continued growth in revenue, EBITDA and net income.
Increased global enrichment presence with our US facility now operational
In June 2010, Urenco’s fourth enrichment facility received authorisation from the US Nuclear Regulatory Commission (NRC) to begin commercial operations. The first cascades are now on-line, and further cascades will be commissioned as per the Group’s development plan for the facility.
The successful opening of the Urenco USA facility is a major milestone for Urenco because:
- It significantly enhances Urenco’s position as a global provider of enrichment services to its worldwide customer base.
- It substantially reduces Urenco’s overall project execution risk.
- It marks the beginning of a transformation of the US facility from a major capital investment project to an income generating business.
- It demonstrates how Urenco’s technology, already proven across the Group’s European facilities, can be successfully transferred to a new plant (and the first operating with centrifuge technology in the United States) in a different regulatory environment.
The Group’s focus in the United States is now on serving customer needs and extending the facility’s capacity.
Strong order book underpins further expansion
Urenco’s order book continues to remain at a high level. Currently, forward orders stand in excess of €20 billion and extend beyond 2025. This strong visibility of future revenues successfully underpins Urenco’s strategy of growth through investment. Urenco continues to be a leading provider of enriched uranium to the global nuclear power industry maintaining a market share of 25% in a growing market. Further investment in capacity expansion within Europe and the US will ensure the Group meets the increasing demand from its customers.
Good progress in European enrichment capacity expansion projects
Successful execution of enrichment capacity expansion projects continued during the first six months of 2010 with investment in capital expenditure across the European sites amounting to €145 million (€322 million across the Group). Additional production capacity in excess of 500tSW (+5%) became operational at Urenco’s enrichment facilities in Germany and the Netherlands during the first half of 2010, with further capacity to be installed during the next six months. Urenco continues to work with its technology partner, ETC, to ensure that it has sufficient resources to execute Urenco’s longer-term expansion programme.
Funding position strengthened
Urenco’s liquidity position continues to be good with significant forward cover from its committed funding facilities into the middle of 2011. In the first half of 2010, Urenco successfully placed a €500 million, 7-year Eurobond. This has been used to meet capital expenditure requirements and to prepare for the forthcoming repayment of the Group’s €300 million Eurobond which matures at the end of 2010.
Net cash flows from operating activities increased to €297 million (30% higher than 2009), with the majority of this driven by incidentally high levels of pre-funding of cascades at ETC.
Urenco will continue with its significant investment programme in the second half of 2010, with additional capacity being installed in both Europe and the US. At the year end, it is expected that the Group will report continued growth in revenue, EBITDA and net income, supported by increases in sales volumes and economies of scale.
Helmut Engelbrecht, Chief Executive of the Urenco Group, commenting on the half-year results, said:
“Urenco’s operations delivered another strong performance in the first half of 2010 and we are well under way to meet our 2010 objectives. The start of operation at Urenco’s fourth facility, the first centrifuge technology site in the US, is a very significant milestone for the Urenco Group. This major achievement provides strong evidence of Urenco’s ability to transfer its sophisticated and proven technology to a new regulatory territory and underlines our position as a leading supplier in the global enrichment market.
“Urenco’s ongoing investment in capacity and the successful execution of European and US expansion projects exemplifies the Group’s ability to deliver on commitments and meet the evolving needs of our global customer base.
“Urenco’s forward order book continues to strengthen steadily providing long-term revenue visibility and demonstrating the successful strategy of growth through investment.
“During the first half of the year the Urenco Group has realised a number of significant achievements. I would like to thank all employees for both their continued commitment to safe operations and their success in project execution.”
Urenco is an international supplier of enrichment services and fuel cycle products with its head office based close to London, UK. With plants in Germany, the Netherlands, the UK and the USA, it operates in a pivotal area of the nuclear fuel supply chain which enables the sustainable generation of electricity for consumers around the world.
Using centrifuge technology designed and developed by Urenco, the Urenco Group provides safe, cost effective and reliable uranium enrichment services for power generation within a framework of high environmental, social and corporate responsibility standards.